Good stuff! Like the historical approach.
btw what happened to the third function of money, that of a measure of value? I notice this function is being neglected these days by a lot of commentators and wonder why that is.
Also stated was "Golds only use is money as a means to store wealth". Don't you think that the value that has been put on gold by humanity has transcended
a mere monetary one? It has often been considered by many cultures as a symbol of power, wealth and status and has accordingly been used to much effect in the political, religious and artistic spheres. Kublai Khan, for example, kept all the kingdom's gold in-house and issued paper currency to be used as mere money. This also provides an insight as to the reason why gold did not flow back to the west from the orient when used for trading. The earlier rational economists thought this could not happen and that trade imbalances would be restored when those nations with much gold would spend freely while those with little would tighten their belts. The false assumption was that all nations would consider gold mere money.... and not as more than a mere means to another end.... which money is.
I wonder if it is a peculiarly western and modern idea that "gold is money". Of course, the "primordial" value [as mentioned above] that was placed on gold has also made it the strongest symbol of money and possibly the best currency. Perhaps a perfect currency does not exist.
I would hazard a guess the modernity of the west, in the tradition of the frenchified philosophy of Rousseau, is uncomfortable with the idea of power... having polarized it to freedom. Yet, gold is powerful and has a power over our minds. I woud also add the observation of an ancient Greek; "Gold is tried with a touchstone, and men by gold".
Just some thoughts.
Edit: gold bugs seem to lean towards the orient rather than the occident in regard to gold.
Modern money "shorts" the currency, and is backed by debt. The debt is real. A debt deflation will lead to a prolonged period of deleveraging, where the short-covering of currencies will strengthen currencies relative to asset prices. At the global level, in the FX market, central currencies will benefit from deleveraging at the expense of peripheral currencies. Due to instability and uncertainty, gold will benefit against all currencies as it continues to be re-monetized.
Hold on to your hats for hyper-deflation, where cash is king, and gold the King of cash.
[Silver? A Volatile Queen].